While the big tech companies have been carrying the market and attracting much investor interest, some industries have been reporting stellar numbers that might not have gotten the attention they deserve. Investors looking for early entry into companies that have not shot up yet may find these industries worthwhile. One of these industries is the beer and alcohol sector.
Business establishments are regaining lost ground as the global economy recovers. This increases demand for products like beer and alcohol that some businesses serve. With beer's global appeal, it's obvious that this is one of the consumer products that could experience recovery.
Here are three beer companies that we think may benefit from the industry's current growth trajectory.
Boston Beer Company (SAM)
The Boston Beer Company, Inc. is a beer and beverages company that is well known for its brand, Samuel Adams. The company was founded in 1984 and has been making beer ever since. SAM also owns various trademarks, which include Boston Beer Company, Angry Orchard Cider Company, and others. Boston Beer also produces other alcoholic beverages, including flavored malt and hard cider hard seltzer at its company-owned breweries and cidery arrangements at other brewery locations. SAM also offers tours in its areas; according to press releases, they have had around 1.9 million visitors to their Boston Beers properties. The company surprised the market with stellar Q2 EPS at $4.72, beating estimates by 36.81%. Revenue is also up by 47.15% QoQ.
Analyst Rating
Analysts rate SAM as a “HOLD” based on 1 Strong buy, 6 Holds, 1 Moderate sell, and 2 Strong sells. The mean estimate is $327.91, and the high estimate is $406.00, an upside of 13.56%. While it may not be a buy rating now, the move of the mean recommendation from a moderate sell to a hold in the last three months may indicate that experts are seeing the company in a new light.
Molson Coors Beverage Company (TAP)
Molson Coors Beverage is a holding company that owns many beloved and iconic beer brands like Coors Banquet, Coors Light, Miller Lite, and more. Molson Coors operates in two primary segments: EMEA & APAC and Americas. The EMEA and APAC segment is responsible for production in its breweries and marketing licenses in various countries in the Asia Pacific, European countries, Africa, and the Middle East. Its Americas segment is responsible for its brands' production, marketing, and sales in the U.S., Canada, and South America. TAP’s Q2 performance was exceptional, with revenue numbers growing by 39.22% QoQ and 11.80% YoY. Its earnings were able to beat analyst forecasts by 9.20%.
Analyst Rating
Analysts have recommended TAP as a “Hold” based on 3 Strong buys, 9 Holds, and 2 Strong sell recommendations. The mean estimate for TAP is $67.69, and the high target is $77.00, with an upside potential of 22.44%.
Constellation Brands, Inc. (STZ)
Constellation Brands, Inc. is an alcohol and beverage company producing beer, wine, and spirits. Constellation operates in the U.S., Italy, Mexico, and New Zealand. Some of its famous brands in their import and craft beer categories include Corona Extra, Corona Light, Corona Premier, Pacifico, Modelo Especial, Victoria, and others. It offers a portfolio of wine and spirits brands, like Casa Noble and Kim Crawford. Besides its beer, wine, and spirits, the company has a canopy segment that operates its distilleries and other facilities in the United States. STZ reported its Q2 revenue with significant QoQ growth at 25.88%, while its EPS came in above expectations at $2.91, beating analyst predictions by 2.83%
Analyst Rating
Analysts rate STZ as a “Strong Buy” based on 12 Strong buys, 1 Moderate buy, and 3 Hold recommendations. The mean target price is $280.41, and the high target price is $311.00, an upside of 18.75%.
Final Thoughts
Beer might not be everyone’s cup of tea, so to speak, but you can be sure that everyone’s familiar with it. As Peter Lynch said, “Invest in what you know.” And I agree, choosing companies you understand is one of the best ways to start investing. Pick companies that you’re familiar with. Learning how they operate and how they make money allows you to focus on more critical aspects, like what makes them an excellent choice and what makes them likely to succeed in the future.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
